A third-party logistics provider (abbreviated 3PL, or sometimes TPL) is a firm that provides a one stop shop service to its customers of outsourced (or "third party") logistics services for part, or all of their supply chain management functions.
Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.
Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.
For example, hypermarket players tend to be more focus on retail business, the warehouse and logistics division are sub contract to 3PL provider. 3PL would in turn have a few warehouses (e.g. food and beverages warehouses, furniture warehouse, apparels warehouse, perishable warehouse for vegetables and poultry/meat etc.) that received and stored different goods for the hypermarket. 3PL would manage all the warehouses and ensure the right products and quantities are sent to the hypermarket chains.
Besides, 3PL also able to control a new product launch, meaning to say a manufacturer/trader intend to push for a new product (e.g. Tropicana twister). He will negotiate with the 3PL on volume, terms and charges (% fee on volume park at 3PL warehouse). 3PL will in turn approach hypermarkets (Carrefour, Tesco etc.) and agents (stores, convenient shops etc.) to distribute the Tropicana twister . 3PL will manage the Tropicana twister in term of brand awareness and pricing.
There are 3 type of 3PL :-
i) Asset based (3PL companies use their own truck, warehouses and personnel to operate their business)
ii) Management based (3PL companies provide the technological and managerial functions of their clients, but do not necessary own any asset)
iii) Integrated based (can be either be asset based or management based to supplement their services with whatever services needed by their clients
